FR Doc 06-9543

[Federal Register: December 6, 2006 (Volume 71, Number 234)]
[Proposed Rules]
[Page 70683-70692]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06de06-13]

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Proposed Rules
Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.

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[[Page 70683]]

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV06-981-1 PR]

Almonds Grown in California; Outgoing Quality Control
Requirements and Request for Approval of New Information Collection

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule invites comments on adding outgoing quality
control requirements under the administrative rules and regulations of
the California almond marketing order (order). The order regulates the
handling of almonds grown in California and is administered locally by
the Almond Board of California (Board). This proposed rule provides for
a mandatory program under the order to reduce the potential for
Salmonella bacteria in almonds. This action would help ensure that
quality almonds are available for human consumption. This proposal also
announces the Agricultural Marketing Service's (AMS) intention to
request approval of a new information collection issued under the
order.

DATES: Comments must be received by January 22, 2007. Pursuant to the
Paperwork Reduction Act, comments on information collection burden that
would result from this proposal must be received by February 5, 2007.

ADDRESSES: Interested persons are invited to submit written comments
concerning this rule. Comments must be sent to the Docket Clerk,
Marketing Order Administration Branch, Fruit and Vegetable Programs,
AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC
20250-0237; Fax: (202) 720-8938, E-mail: moab.docketclerk@usda.gov. or
Internet: http://www.regulations.gov. All comments should reference the

docket number and the date and page number of this issue of the Federal
Register and will be available for public inspection in the Office of
the Docket Clerk during regular business hours, or can be viewed at:
http://www.ams.usda.gov/fv/moab.html.

FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Assistant Regional
Manager, or Kurt J. Kimmel, Regional Manager, California Marketing
Field Office, Marketing Order Administration Branch, Fruit and
Vegetable Programs, AMS, USDA, Telephone: (559) 487-5901, Fax: (559)
487-5906, or E-mail: Maureen.Pello@usda.gov or Kurt.Kimmel@usda.gov..

Small businesses may request information on complying with this
regulation by contacting Jay Guerber, Marketing Order Administration
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence
Avenue, SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202)
720-2491, Fax: (202) 720-8938, or E-mail: Jay.Guerber@usda.gov.

SUPPLEMENTARY INFORMATION: This proposed rule is issued under Marketing
Order No. 981, as amended (7 CFR part 981), regulating the handling of
almonds grown in California, hereinafter referred to as the ``order.''
The order is effective under the Agricultural Marketing Agreement Act
of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the
``Act.''
The Department of Agriculture (USDA) is issuing this rule in
conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule is not intended to have retroactive effect.
This rule will not preempt any State or local laws, regulations, or
policies, unless they present an irreconcilable conflict with this
rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15) (A) of
the Act, any handler subject to an order may file with USDA a petition
stating that the order, any provision of the order, or any obligation
imposed in connection with the order is not in accordance with law and
request a modification of the order or to be exempted therefrom. Such
handler is afforded the opportunity for a hearing on the petition.
After the hearing USDA would rule on the petition. The Act provides
that the district court of the United States in any district in which
the handler is an inhabitant, or has his or her principal place of
business, has jurisdiction to review USDA's ruling on the petition,
provided an action is filed not later than 20 days after the date of
the entry of the ruling.
This proposed rule invites comments on adding outgoing quality
control requirements under the administrative rules and regulations of
the order. This rule provides for a mandatory program to reduce the
potential for Salmonella bacteria in almonds. This action would help
ensure that quality almonds are available for human consumption. This
action was unanimously recommended by the Board at a meeting on August
22, 2006. This proposal also announces AMS's intention to request
approval of a new information collection issued under the order.
Section 981.42(b) of the order provides authority for the Board to
establish, with approval of the Secretary, such minimum quality and
inspection requirements applicable to almonds to be handled or to be
processed into manufactured product, as will contribute to orderly
marketing or be in the public interest. In such crop year, no handler
shall handle or process almonds into manufactured items or products
unless they meet the applicable requirements as evidenced by
certification acceptable to the Board. The Board, with approval of the
Secretary, may establish rules and regulations necessary and incidental
to the administration of this provision.

Salmonella Outbreaks Linked to Almonds

In 2001, a Salmonella outbreak was identified in Canada, which was
linked to a specific retailer, traced back to raw almonds sold in bulk
bins, and ultimately traced back to the handler and the grower. The
Salmonella strain was extremely unusual and had not previously been
associated with contamination in a non-animal product. Three orchards
where the almonds were produced were identified, and samples gathered
from the orchards contained Salmonella. With oversight by the
California Department of Health Services (CDHS), procedures were
implemented by the grower, huller/

[[Page 70684]]

sheller, and handler to specify how the almonds from those orchards
were to be processed using a treatment to reduce the potential for
Salmonella before the almonds were moved into commercial channels. The
Board initiated an extensive research program to help understand the
occurrence of Salmonella in almond orchards.
The Board also initiated an education program for the industry
regarding Good Agricultural Practices (GAP's), Good Manufacturing
Practices (GMP's), and Sanitation Standard Operating Procedures
(SSOP's). GAP's provide guidelines to growers on how to minimize
potential biological hazards during the production and harvesting of
almonds. GMP's define procedures to be used by handlers to allow
almonds to be processed, packed, and sold under sanitary conditions.
SSOP's help to ensure a clean and sanitary environment in the packing
facility. Together, these practices and procedures provide a framework
for a Hazard Analysis Critical Control Point (HACCP) program for the
industry to proactively eliminate or minimize potential sources of
Salmonella contamination.
In the spring of 2004, a second Salmonella outbreak occurred in
Oregon that was linked to raw almonds purchased at a particular
retailer. The Salmonella strain was very similar to that identified in
2001. One handler had been the supplier to the retailer, and the
handler initiated a voluntary recall of 5 million pounds of almonds
sold in the U.S. The Food and Drug Administration (FDA) subsequently
announced that the almonds had been exported to eight countries. The
handler then initiated a full recall of the 6 suspect almonds produced,
packed, and shipped, increasing the recall to approximately 15 million
pounds.
In the summer of 2004, the Board unanimously approved a voluntary
action plan that called for treating all almonds to reduce the
potential for Salmonella. Handlers were encouraged to treat the almonds
prior to shipment, or ship the almonds to a manufacturer who agreed to
treat the almonds. The Board continued to fund research on various
technologies that could be used to help reduce the potential for
Salmonella in almonds.

Board Recommendation for a Mandatory Treatment Program

To further its efforts in providing a high quality product to
consumers, in August 2006, the Board recommended that a mandatory
treatment program be implemented under the order, pursuant to authority
provided in Sec. 981.42(b). Specifically, handlers would have to
subject their almonds to a process that achieves a minimum 4-log
reduction in Salmonella bacteria prior to shipment. The program would
provide for an exemption for handlers who ship untreated almonds under
a direct verifiable (DV) program to manufacturers within the U.S.,
Canada, or Mexico who agree to treat the almonds accordingly. The
program would also provide for an exemption for handlers who ship
untreated almonds to locations outside of the U.S., Canada, or Mexico.
All containers of untreated almonds shipped under the two exemptions
would have to be prominently identified with the term
``unpasteurized.'' The program would become effective for the 2007-08
crop year which begins on August 1, 2007.

Specific Parameters of Proposed Mandatory Program

Under the Board's proposal, handlers would have to subject their
almonds to a treatment process or processes that achieve in total a
minimum 4-log reduction of Salmonella bacteria, or ship their almonds
under one of the two exemptions cited above. The proposal would only
affect those who meet the definition of ``handler'' in Sec. 981.13 of
the order (thus exempting growers selling through roadside stands). Log
reduction describes how much bacterial contamination is reduced by a
treatment process. A 4-log reduction decreases bacteria by a factor of
10,000 (4 zeros). One treatment process that independently achieved a
minimum 4-log reduction could be used, or a combination of different
treatments could be used that collectively achieve a minimum 4-log
reduction (``hurdle'' technologies).
The Board initially supported a 5-log reduction, which is FDA's
performance standard. However, the Board subsequently funded research
with the University of California, Davis, in conjunction with Rutgers
University, whereby a risk assessment model was developed using data
from the two Salmonella outbreaks, as well as data from an industry
pathogen survey.\1\ The risk assessment model demonstrated that a
minimum 4-log reduction could provide an appropriate level of consumer
protection. Thus, the Board concluded that a 4-log reduction was an
appropriate standard for almonds.
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\1\ Journal of Food Protection, Vol. 69, No. 7, 2006, Pages
1594-1599.
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Treatment Processes

Acceptable treatment processes for handlers would have to utilize
technologies that have been determined to achieve a minimum 4-log
reduction of Salmonella bacteria in almonds, pursuant to a letter of
determination issued by the FDA, or acceptance by a scientific review
panel as identified by the Board (known as the Technical Expert Review
Panel, or TERP).
The FDA reviews studies utilizing specific protocols and treatment
parameters, and issues a letter of determination when it determines
that a process has sufficiently demonstrated its effectiveness to
achieve a 5-log reduction of Salmonella in almonds. To date, FDA has
issued letters of determination for propylene oxide (PPO), oil
roasting, blanching, and for a moist heat process.
The TERP would evaluate various treatment technologies against
specific criteria, based on recommendations provided by the National
Advisory Committee on Microbiological Criteria in Food (NACMCF). The
NACMCF was formed in 1988 under Departmental Regulation 1043-28, and
provides impartial, scientific advice to Federal food safety agencies
for use in the development of an integrated national food safety
systems approach from farm to final consumption to assure the safety of
domestic, imported, and exported foods. It is co-sponsored by USDA's
Food Safety and Inspection Service, the FDA, the Center for Disease
Control and Prevention, the National Marine Fisheries Service, and the
Department of Defense Veterinary Service Activity.
While the TERP would not ``recommend'' or ``approve'' technologies,
its review would ensure that technologies utilized by the industry have
been evaluated against specific science-based criteria demonstrating
the technology's ability to deliver a lethal treatment for Salmonella
in almonds. Documentation and data would be provided to the TERP (by a
company pursuing TERP acceptance for its technology) for review to
ensure that the proposed technologies are consistently achieving the
minimum 4-log reduction.
The TERP, initially formed by the Board in the fall of 2004 to
review treatment technologies, consists of four scientists, with a
representative from the FDA serving as an ex-officio member. The TERP
has been evaluating various technologies and treatments for the almond
industry, and to date, the TERP has accepted steam and moist heat
treatments as acceptable for achieving the Board's Salmonella reduction
goals. Membership on the TERP would be approved annually by the Board
prior to the beginning of each crop year, or more frequently if needed
during the crop

[[Page 70685]]

year, for example, to fill a vacancy on the panel.

On-Site Versus Off-Site Treatment

Under the Board's proposal, unless handlers shipped their almonds
to a Board-approved DV user (described later in this document), or
shipped their almonds to locations outside of the U.S., Canada, or
Mexico, handlers would have to subject their almonds to a treatment
process or processes prior to shipment either at their handling
facility (on-site), or at an off-site treatment facility located within
the production area (California). An off-site facility may or may not
be affiliated with another handler. Transportation of almonds by a
handler to an off-site treatment facility would not be considered a
shipment.

Validation by Process Authorities

Handlers could only use, or transport their almonds to off-site
treatment facilities that use treatment processes that have been
``validated'' by a Board-approved process authority. Validation means
that the treatment technology and equipment utilized have been
demonstrated to achieve the minimum 4-log reduction. The use of process
authorities is modeled after process authorities as cited in the
``Guide to Inspections of Low Acid Canned Food Manufacturers'' (Guide)
(http://www.fda.gov). Treatment technology and equipment that have been

modified to the point where operating parameters such as time,
temperature, or volume, change must be revalidated.
For purposes of this document, a process authority is a person or
an organization that has expert knowledge of appropriate processes for
the treatment of almonds as described above, and meets other criteria
as specified by the Board. Such criteria would include, but not be
limited to, the following: (1) Knowledge about the equipment used for
the treatment process; (2) experience in conducting appropriate studies
to determine the ability of the equipment to deliver the appropriate
treatment (such as heat penetration or heat distribution studies); and
(3) the ability to determine that sufficient data has been gathered to
identify the critical factors needed to ensure the quality of the final
product. On an annual basis, process authorities would have to submit
an application to the Board on ABC Form No. 51, ``Application for
Process Authority for Almonds,'' and be approved by the Board's TERP.
Should the applicant disagree with the TERP's decision, it could appeal
the decision in writing to the Board, and ultimately to USDA.

Compliance and Verification Program

Treatment Plans
To ensure compliance with the mandatory program, handlers would be
subject to verification by the Federal or Federal-State Inspection
Service (inspection agency). Handlers could use either an on-site
(traditional) or an audit-based verification program. Each handler
would decide which verification program would be the most cost-
effective for his or her operation. All handlers would be required to
submit a treatment plan to the Board for the upcoming crop year by May
31. The crop year runs from August 1 through July 31 of the subsequent
year. However, for the 2007-08 crop year, which would be the first year
that the mandatory program was in effect, handlers would have to submit
their treatment plans by May 1, 2007. The plan would be reviewed by the
Board in conjunction with the inspection agency to ensure such plans
were complete and auditable. The plan would be approved by the Board
and must address specific parameters for the handler to ship almonds.
Such parameters would include, but not be limited to, the following:
(1) The location of treatment plant; (2) the name and address of off-
site treatment facility (custom processor), if appropriate; (3) a
statement regarding whether treatment processes have been accepted by
the TERP and/or ``determined'' by the FDA; (4) a statement regarding
validation of treatment technology and equipment by a Board-approved
process authority; (5) a statement whether untreated almonds would be
exported; (6) a statement whether the handler would use the DV program;
(7) a description or flow chart explaining how raw, untreated almonds
enter and flow through the handler facility, and how the product would
flow through the treatment process, including post treatment, packing,
and/or storage; (8) a list of all treatments that would be used on the
almonds (including, for example, number of blanching lines, etc.); (9)
a description of how treated product would be differentiated and
segregated from untreated product to ensure maintenance of treated
product integrity; (10) a list of procedures regarding how interhandler
transfers would be tracked; and (11) an explanation by handlers using a
combination of processes to achieve a minimum 4-log reduction, that the
processes occur in an appropriate sequence in sufficiently close
proximity to ensure that the integrity of the treated product is
maintained between processes.
Almonds sent by a handler for treatment to an off-site facility
affiliated with another handler would be subject to the approved
treatment plan utilized at that off-site facility. Handlers would have
to follow their own approved treatment plans for almonds sent to an
off-site facility that is not affiliated with another handler.

On-Site Verification Program

Under an on-site verification program, handlers would cause the
inspection agency to verify that their almonds had been subjected to an
acceptable treatment process that had been validated by a Board-
approved process authority. Such handlers would have to submit, or
cause to be submitted, a verification report to the Board. The
inspection agency would have to physically observe the treatment
process to issue such a report. It would be the handler's
responsibility to arrange for inspection agency verification. An on-
site program would be comparable to a traditional in-line or lot
inspection program.

Audit-Based Verification Program

Under an audit-based verification program, handlers would be
subject to periodic audits conducted by the inspection agency. The
inspection agency would verify that handlers were following their
approved treatment plans. Audit frequency would be tied to handler
performance. Handlers would be provided with written audit reports
specifying deficiencies. Handlers who do not comply with an audit-based
verification program would be required to revert to an on-site
verification program. Audit reports would be provided to the Board to
facilitate program compliance.
Interhandler Transfers
Interhandler transfers of almonds may or may not be treated prior
to transfer. Handlers receiving untreated almonds from another handler
would be responsible for treating the product. Handlers receiving
treated almonds from another handler would need to have procedures
outlined in their treatment plan addressing how the integrity of the
treated almonds would be maintained. In all instances involving
interhandler transfers, it would be the responsibility of the receiving
handler to ensure that the almonds are treated prior to shipment and to
maintain documentation to that effect.
Handler Records
Handlers would be required to maintain records and documentation

[[Page 70686]]

that would be subject to audit by the inspection agency and the Board
for the purpose of verifying compliance with the regulation. Consistent
with Sec. 981.70 of the order regarding handler records and
verification, records would have to be maintained for 2 full years
following the end of a crop year. Such records would identify lots from
the point of treatment forward to the point of shipment by the handler.
Lot identification would also provide the ability to differentiate
treated from untreated product.
Exemptions

Direct Verifiable Program

Handlers could ship untreated almonds directly to Board-approved
manufacturers within the U.S., Canada, or Mexico for further processing
under the Direct Verifiable or DV program. The Board would issue a DV
user code to an approved manufacturer. Handlers would have to reference
this code on all documentation accompanying the lot. This would help
the Board track DV shipments and facilitate compliance with the
program. Handlers would also have to identify each container of such
almonds with the term ``unpasteurized.'' Container means a box, bin,
bag, carton, or any other type of receptacle used in the packaging or
handling of bulk almonds. The lettering must be on one outside
principal display panel, at least \1/2\ inch in height, clear and
legible. If a third party is involved in the transaction, the handler
must provide sufficient documentation to the Board to track the
shipment from the handler's facility to the approved DV user.
Manufacturers wanting to participate in the DV program would have
to submit an application annually to the Board on ABC Form No. 52,
``Application for Direct Verifiable (DV) Program for Further Processing
of Untreated Almonds,'' and be approved by the Board's TERP. Should the
applicant disagree with the TERP's decision, it could appeal the
decision in writing to the Board, and ultimately to USDA.
Similar to handlers, manufacturers would have to subject the
almonds to a treatment process or processes using technologies that
achieve in total a minimum 4-log reduction of Salmonella bacteria as
determined by the FDA or accepted by the TERP. Additionally,
manufacturers could use treatment processes that have been
``established'' by a Board-approved process authority. ``Established''
means that that the process authority would evaluate treatment
processes and protocols to ensure the technology's ability to deliver a
lethal treatment for Salmonella in almonds and achieve a minimum 4-log
reduction. The Board recommended this option to address manufacturers'
concern regarding the process to seek TERP acceptance of their
treatments, which could involve providing data on their proprietary
processes to the TERP (i.e., specific time and temperature data for
special equipment).
Manufacturers must also do the following: (1) Identify the
manufacturing locations where treatment would occur; (2) have their
treatment technology and equipment validated by a Board-approved
process authority. Treatment technology and equipment that have been
modified to the point where operating parameters such as time,
temperature, or volume, change must be revalidated; (3) maintain all
records regarding validation and verification of treatment methods,
processing, and product traceability for 2 years, and make such records
available for review by the Board; and (4) ship untreated almonds (due,
for example, to a manufacturer overbuying) to a handler, to another
approved DV user, to locations outside the U.S., Canada, or Mexico
(containers must remain identified with the term unpasteurized), or
dispose of such almonds in non-edible channels.
Further, DV users would be audited by a Board-approved auditor
within 1-2 months after the start of treatments, and at least once
every 12 months thereafter. Such audits would determine if: (1) The DV
user utilized appropriate treatment processes; (2) the DV user has a
letter issued by a Board-approved process authority that validated that
the treatment achieves a 4-log reduction of Salmonella; (3) personnel
and procedures used at the facility ensure that treatment parameters
were followed; and (4) records are retained for two years that document
the treatment of almonds, or that any untreated almonds were properly
disposed of as outlined above. A summary audit report of the DV user
would be sent to the Board within 10 days of the audit. On an annual
basis, DV user auditors would have to submit an application to the
Board on ABC Form No. 53, ``Application for Direct Verifiable (DV)
Program Auditors,'' and be approved by the Board's TERP. Should the
applicant disagree with the TERP's decision, it could appeal the
decision in writing to the Board, and ultimately to USDA.
The Board recommended including Mexico and Canada as part of the DV
program for compliance purposes. The Board was concerned that handlers
could circumvent the regulation by shipping untreated almonds to Mexico
or Canada, then, bring them back into the U.S. and sell them in normal
market channels.

Shipments Outside of the U.S., Canada, or Mexico

Handlers could also ship untreated almonds directly to locations
outside the U.S., Canada, or Mexico, provided that each container of
such almonds is prominently identified with the term unpasteurized. The
lettering must be on one outside principal display panel, at least \1/
2\ inch in height, clear and legible. Again, if a third party is
involved in the transaction, the handler must provide sufficient
documentation to the Board to track the shipment from the handler's
facility to the importer in the foreign country.
Accordingly, a new paragraph (b) regarding outgoing quality control
and a mandatory program to reduce the potential for Salmonella bacteria
contamination in almonds is proposed to be added to Sec. 981.442 of
the order's administrative rules and regulations.

Initial Regulatory Flexibility Analysis

Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this rule on small entities. Accordingly, AMS has
prepared this initial regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and the rules issued thereunder, are unique in
that they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
There are approximately 6,000 producers of almonds in the
production area and approximately 115 handlers subject to regulation
under the marketing order. Additionally, the Board estimates there
would be about 25 process authorities, 53 almond manufacturers, and 50
DV program auditors impacted by this rule. Small agricultural producers
are defined by the Small Business Administration (13 CFR 121.201) as
those having annual receipts of less than $750,000, and small
agricultural service firms are defined as those whose annual receipts
are less than $6,500,000.
Data for the most recently completed crop year indicate that about
52 percent of the handlers shipped under $6,500,000 worth of almonds.
Dividing

[[Page 70687]]

average almond crop value for 2003-2005 reported by the National
Agricultural Statistics Service (NASS) ($2.043 billion) by the number
of producers (6,000) yields an average annual producer revenue estimate
of about $340,000. Based on the foregoing, about half of the handlers
and a majority of almond producers may be classified as small entities.
While data regarding the size of the process authorities is not
available, it may be assumed that some process authorities, almond
manufacturers, and DV program auditors may be classified as small
entities.
The almond industry's 6,000 growers produce approximately 1 billion
pounds annually (kernel weight basis). Industry members expect
production to increase by 50 percent in the next 3-5 years, due to a
significant amount of newly planted acreage that will come into
production.
Although the Board currently projects that there are about 115
handlers, handler number estimates can vary over time. Recent surveys
have yielded estimates ranging from 112 (see Table 1) to 117 (see Table
2). Handlers ultimately market their almonds to customers in the U.S.
and abroad. As shown in Table 1, the Board estimates that about 27 of
112 handlers handle more than 10 million pounds each, and cumulatively
handle 82 percent of the crop.

Table 1.--Number of Handlers Categorized by Size
----------------------------------------------------------------------------------------------------------------
Between 1 Between 5
Less than 1 and 5 and 10 More than
million million million 10 million
lbs. lbs. lbs. lbs.
----------------------------------------------------------------------------------------------------------------
No. of handlers............................................. 41 28 16 27
Percent of crop handled..................................... 1 6 11 82
----------------------------------------------------------------------------------------------------------------

According to data provided by the Board, about 30 percent of
California almonds are sold domestically (about 300 million pounds). An
estimated 20 percent of the domestic shipments are in the form of
manufactured product--blanched, sliced, diced, or otherwise further
processed using thermal treatments. About 70 percent of California
almond production is exported to more than 80 countries worldwide.
Mexico and Canada account for approximately 5 percent of export
shipments. The quantities shipped by companies handling almonds vary
considerably. However, a limited number of handlers are responsible for
the majority of domestic and export shipments as shown in Table 2
below. Table 2 shows that 16 handlers are responsible for 90 percent of
domestic shipments. Many of the same handlers are among the 38 that are
responsible for 90 percent of exports. About 79 of an estimated 117
handlers are responsible for the remaining 10 percent of export
shipments.

Table 2.--Handler Shipment Summary
----------------------------------------------------------------------------------------------------------------
Export to Canada and All export (includes
Domestic (U.S.) Mexico 37,600,000 Canada and Mexico)
300,000,000 pounds pounds 700,000,000 pounds
----------------------------------------------------------------------------------------------------------------
No. of handlers responsible for 50 percent of 3 4 9
shipments....................................
No. of handlers responsible for 80 percent of 12 16 26
shipments....................................
No. of handlers responsible for 90 percent of 16 26 38
shipments....................................
----------------------------------------------------------------------------------------------------------------

This rule would add a new paragraph (b) for outgoing quality
control under Sec. 981.442 of the order's administrative rules and
regulations, whereby a mandatory program to reduce the potential for
Salmonella bacteria in almonds would be implemented under the order.
Specifically, handlers would have to subject their almonds to a
treatment process that achieves a minimum 4-log reduction in Salmonella
bacteria prior to shipment. The program would exempt handlers who ship
untreated almonds under a direct verifiable (DV) program to
manufacturers within the U.S., Canada, or Mexico who agree to treat the
almonds accordingly. The program would also exempt handlers who ship
untreated almonds to locations outside of the U.S., Canada, or Mexico.
All containers of untreated almonds shipped under the exemptions would
have to be prominently identified with the term ``unpasteurized.'' The
program would take effect for the 2007-08 crop year which 25 begins on
August 1, 2007. Authority for the program is provided in Sec.
981.42(b) of the order.
According to the Board, the costs to individual handlers to comply
with the program would vary considerably depending on their markets and
treatment method(s) chosen. Handlers could: (1) Install new equipment
in their processing lines to treat the almonds prior to shipment into
commercial channels; (2) outsource to another handler or an off-site
facility within California for treatment; (3) transfer their untreated
product to another handler who would treat the almonds prior to
shipment; (4) ship their untreated almonds to Board-approved DV users
or to locations outside of the U.S., Canada, or Mexico; or (5) use a
combination of these approaches.
In a handler survey conducted by the Board in March 2005 (to which
116 handlers handling almonds at that time responded), 86 handlers (74
percent) have their own facilities and/or equipment to process almonds;
the remainder have almonds processed on their behalf. Of those handlers
with their own facilities and/or equipment, 66 (77 percent of 86)
indicated they planned to install equipment to treat almonds while the
remaining 20 indicated they would outsource to a third party, or custom
processor. Again, the overall economic impact of the program would vary
based on the approach selected. Smaller handlers may choose to defer
purchasing equipment and send their almonds to an off-site facility for
treatment until more cost effective technologies are available.
Costs would also vary by treatment method. Some handlers may choose
to install PPO chambers at their facilities. Handler sources estimate
that typical installation costs for a PPO chamber range from $500,000
to $1,250,000. As with other technologies, overall cost would depend
upon how much infrastructure is in place in the processing facility as
well as the desired

[[Page 70688]]

capacity of the chambers. Actual treatment cost for handlers treating
their own product is approximately $0.03 per pound, varying with volume
and efficiencies. PPO treatment is currently available in the industry
on a contract basis at $0.04-$0.05 per pound (including transportation
to the facility).
Regarding steam technologies, handler sources estimate the
following equipment costs for in-line steam systems designed to treat
almonds at varying capacities from 1,000 pounds to over 30,000 pounds
of almonds per hour:

Table 3.--Estimated Equipment Costs for Steam Units for Differing Levels
of Treatment Capacity
------------------------------------------------------------------------
Capacity (pounds per hour) Equipment costs
------------------------------------------------------------------------
1,000.......................................... $100,000-$200,000
5,000.......................................... 300,000-325,000
7,500-15,000................................... 370,000-470,000
20,000-30,000.................................. 525,000-800,000
Over 30,000.................................... 600,000-1,000,000
------------------------------------------------------------------------

While treatment equipment costs would be the most significant
outlay, there would also be capital expenditures associated with
additional conveyance equipment, boilers, cooling systems, bins, and
possible expansion or construction of new buildings. Handler sources
estimate these costs to be an additional 50 percent of the treatment
equipment costs cited in Table 3, depending on capacity needs, and
assuming maximum throughput.
A typical system of 10 million pound annual capacity would be
equivalent to 22,000 pounds per hour, which falls in the 20,000 to
30,000 pound per hour range in Table 3. The treatment equipment costs
for that capacity range from $525,000 to $800,000. With an additional
50 percent for cost of other related equipment and facility expansion,
the costs range from $787,500 to $1,200,000. Handler sources suggest
that a figure near the upper end of that range, $1,125,000, is a good
point estimate of the cost for a 10,000,000 pound per year treatment
line.
An important step in assessing the financial impact of the proposed
mandatory treatment on handlers is to estimate the annualized equipment
cost and operating cost of treating the almonds to prevent Salmonella
contamination. This can be illustrated by additional computations, with
10,000,000 pounds per year serving as a representative level of
treatment capacity, as shown in Table 4, third line of column A. Table
4 also shows a range of costs across different levels of handler
treatment capacity.

Table 4.--Estimate of Average Annual Equipment and Operating Costs at Varying Levels of Handler Treatment Capacity
--------------------------------------------------------------------------------------------------------------------------------------------------------
D E Unit cost of equipment F G H Equipment plus
C Annual use at ------------- operating cost at
B Total cost of ----------------------------- -------------------------
A Handler annual capacity equipment cost equipment, 5 50% of Full Average 50% of Full
* year life ** capacity (c/ capacity operating capacity capacity
50% of A) (C/A) cost (D+F) (E+F)
--------------------------------------------------------------------------------------------------------------------------------------------------------
(Pounds) Cents per pound
----------------------------------------------------- -------------------------------------------------------------------
2,000,000........................................... $300,000 $69,292 $0.069 $0.035 $0.0035 $0.0725 $0.0385
5,000,000........................................... 487,500 112,600 0.045 0.023 0.0035 0.0485 0.0265
10,000,000.......................................... 1,125,000 259,845 0.052 0.026 0.0035 0.0555 0.0295
15,000,000.......................................... 1,500,000 346,460 0.046 0.023 0.0035 0.0495 0.0265
20,000,000.......................................... 1,650,000 381,106 0.038 0.019 0.0035 0.0415 0.0225
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Equipment cost estimates at varying capacity levels, including treatment chambers, plus an additional 50 percent for conveyors, other equipment and
extension of facilities.
** Annualized equipment cost is computed by dividing the equipment purchase cost by 4.3295, which is the Present Value of a $1 annuity for 5 Years
(estimated life of the equipment) at a 5 percent interest rate (estimated cost of capital).
Source for equipment and operating costs: Almond handlers.

To obtain the annual unit cost for installing a 10 million pound
capacity treatment line (an expenditure of $1,125,000 in column B), the
first step is to obtain the annualized equipment cost. The parameters
recommended by the handlers were a 5 year equipment life and a 5
percent cost of capital. The annual equipment use factor (4.3295) is
the present value of a $1 annuity for 5 years at 5 percent. Dividing
the total equipment expenditure of $1,125,000 by 4.3295 yields an
annualized equipment cost estimate of $259,845 (column C). Dividing
this figure by the annual 10,000,000 pound capacity yields a cost per
pound estimate of 2.6 cents (column E). If the treatment line ran at
half capacity, the equipment costs per pound would double to 5.2 cents
(column D).
This method of computing annualized equipment cost does not account
for the tax implications of annual equipment depreciation or for the
salvage value at the end of the equipment's useful life. In addition,
the useful life of many pieces of equipment may well be over 5 years.
Ongoing operational costs (electricity, etc.) are estimated by
handlers to range from $0.0027 to $0.0043 per pound, depending on the
system. The midpoint of this range ($0.0035) appears in column F.
The key results from Table 4 are the cost estimates per pound of
almonds treated, including both annualized equipment costs and
operating costs. The highest cost is 7.25 cents per pound for the
smallest handler (2 million pounds treated annually) operating at 50
percent capacity (column G). The lowest cost estimate is 2.25 cents per
pound for a handler treating 20 million pounds per year operating at
full capacity (column H). These costs can be put in context by
comparing them to almond grower prices as reported each year by the
NASS. For 2003 to 2005, grower prices averaged $2.07 per pound,
computed by dividing the value of production for those three years by
the three-year quantity of production. The treatment cost estimates per
pound in Table 4

[[Page 70689]]

range from 3 percent to 1 percent of the 2003-2005 average grower
price, and represent an even smaller proportion of the prices paid to
handlers when selling to almond users further down the marketing chain.
A key aspect of handler costs is the proportion of total capacity
at which a new production line would operate. Operating at higher
capacity spreads the equipment cost across a wider base. For a small
handler, investing in equipment with this level of capacity may only be
viable economically if the costs are spread over their entire
production run, rather than only applying costs to a small portion of
their production run. If they do not intend to run their entire
production through the treatment process, it may be more viable to
outsource the treatment. Costs of contract processing (i.e., batch
operations for steam processes or PPO treatment) are estimated to range
from $0.04 to $0.05 per pound. This estimate includes additional costs
associated with transporting almonds to a custom facility ($0.01 to
$0.015 per pound). For medium-sized and larger handlers, it may be more
cost effective to construct a treatment processing line, particularly
if they intend to immediately put a significant portion of their
production through the process.
Handler sources estimate that the cost of setting up a new oil
roast line is $300,000 to $600,000, with operating costs of $0.06 to
$0.10 per pound. A blanching line may cost upward of $1,500,000 to
$2,500,000 with an operating cost of approximately $0.12 to $0.22 per
pound. It is unlikely that handlers would select these technologies
unless they are already providing custom processed, value-added
products to their customers.
Regarding compliance and oversight costs, it is anticipated that
handlers who do not currently have thorough recordkeeping procedures in
place would likely have to invest approximately 40-80 person-hours to
develop their treatment plan. However, once this document has been
created, it would be updated on an annual basis, which would likely
involve less time. Validation of treatment systems is estimated to cost
from $1,000 to $3,000 per line, depending upon the complexity of the
equipment utilized. Treatment technology and equipment that have been
modified to the point where operating parameters such as time,
temperature, or volume, change must be revalidated.
Handler verification costs could vary, depending on whether the
handler was under an on-site program or an audit-based program. The fee
for an on-site program would be a minimum charge of $44.00 per hour
(with 1 hour required to treat 44,000 pounds), or $0.204 per
hundredweight, whichever is greater. The former is equivalent to $1.00
per thousand pounds treated. For an audit-based program, the fee would
be $78.00 per hour. Travel time for both programs would be charged at
$44.00 per hour and $0.34 per mile.
Examples of estimated handler verification costs are provided in
Tables 5 and 6 below:

Table 5.--Annual Handler Verification Costs: On-Site Program
----------------------------------------------------------------------------------------------------------------
Volume of almonds treated per year
----------------------------------------------------------
Audit cost by type 100,000 2 mill. 40 mill. 100 mill. 250 mill.
lbs lbs lbs lbs lbs
----------------------------------------------------------------------------------------------------------------
Hourly rate*......................................... $100 $2,000 $40,000 $100,000 $250,000
Per Cwt = $.204...................................... 204 4,080 81,600 204,000 510,000
----------------------------------------------------------------------------------------------------------------
* Hourly rate of $44/hour, with 1 hour required per 44,000 1bs of volume treated (equivalent to $1.00 per
thousand pounds treated).

Table 6.--Annual Handler Verification Costs: Audit-Based Program
----------------------------------------------------------------------------------------------------------------
Audit cost by hours required to complete audit*
-----------------------------------------------------------------------
1 2 3 4 5 6 7 8
----------------------------------------------------------------------------------------------------------------
Audit hourly cost = $78................. $78 $156 $234 $312 $390 $468 $546 $624
Auditor Transportation Cost**........... 32 32 32 32 32 32 32 32
Cost per individual audit............... 110 188 266 344 422 500 578 656
----------------------------------------------------------------------------------------------------------------
* Estimated hours per audit varies by volume treated annually: (up to 2 milllon pounds: 1-3 hours); (more than 2
but less than 40 million pounds: 2-5 hours); (40 million pounds or more: 3-8 hours).
** Estimated auditor transportation cost to each facility is approximately $32: $22 for travel time (\1/2\ hour

The benefits associated with the proposed mandatory program are the
avoided costs of a Salmonella outbreak. These costs may vary depending
on several factors, including the quantity of product recalled, impact
on consumer sales, lost customer confidence, insurance costs, and
possible litigation. Using 2003-2005 average almond crop value as the
basis, a loss of 5 percent would be equal to approximately $102
million.
The Board considered various alternatives and options to a
mandatory treatment program. One option would be to take no action.
However, the Board concluded that this was not in the best interest of
the industry nor consumers. The Board believes that the industry should
provide consumers with a quality product. Taking no action when there
are viable alternatives could be significant in terms of the financial
well being of the industry should another outbreak occur that was
linked to almonds.
The Board also considered continuing its voluntary action plan
alone, without proposing a mandatory program. However, surveys
conducted by the Board indicate that not all handlers are implementing
the action plan. Thus, the Board concluded that a mandatory program is
in the best interest of the industry and consumers.
The Board also considered the effectiveness of testing for
Salmonella prior to shipment. During the 2001 and 2004 outbreaks,
significant amounts of testing occurred at the orchard level, in
hulling and shelling facilities, and at retail. However, it was
determined by the CDHS, University of California, Davis, and other
pathogen experts that testing cannot be relied upon as the only

[[Page 70690]]

measure to ensure that almonds are Salmonella free. Thus, the Board
concluded that testing alone was not a viable alternative.
The Board also explored the merits of requiring alternative log
reductions. As previously mentioned, the Board initially supported a 5-
log reduction, which was FDA's performance standard. However, a risk
assessment model demonstrated that a minimum 4-log reduction could
provide an appropriate level of consumer protection compared to a 5-log
reduction. Thus, the Board concluded that a minimum 4-log reduction was
an appropriate standard for almonds.
The Board also explored the merits of whether the DV program should
be temporary, whereby all almonds would be treated at the handler level
prior to shipment. The Board submitted an initial proposal to USDA in
February 2006 that would have ultimately required handlers to treat all
almonds prior to shipment, with the DV program being temporary.
However, concerns were raised by various parties, including
manufacturers, handlers, and foreign countries, regarding the temporary
nature of the DV program, and the requirement that all exported almonds
be treated prior to shipment. The Board ultimately revised its proposal
to remove the proviso regarding discontinuance of the DV program, to
allow untreated almonds to be shipped to locations outside the U.S.,
Canada, or Mexico, and to require that all containers of untreated
almonds be prominently identified with the term ``unpasteurized.''
This action would impose additional reporting and recordkeeping
burden on California almonds handlers, process authorities, almond
manufacturers, and DV program auditors. Process authorities,
manufacturers, and DV auditors would be required to submit respective
applications to the Board annually. Almond handlers would be required
to submit treatment plans to the Board annually. These new forms and a
sample ``Handler Treatment Plan'' are being submitted to the Office of
Management and Budget (OMB) for approval under OMB Control No. 0581-
NEW. Specific burdens for the three applications and handler treatment
plan are detailed later in this document in the section titled
Paperwork Reduction Act. As with all Federal marketing order programs,
reports and forms are periodically reviewed to reduce information
requirements and duplication by industry and public sector agencies.
Finally, USDA has not identified any relevant Federal rules that
duplicate, overlap, or conflict with this rule.
Additionally, the meetings were widely publicized throughout the
California almond industry and all interested persons were invited to
attend the meetings and participate in deliberations on all issues.
Between the summer of 2004 and the Board's August 2006, meeting, this
issue was addressed at an estimated 12 Board meetings, 18 Food Quality
and Safety Committee meetings, and well over 20 task force meetings.
All of these meetings were public meetings and all entities, both large
and small, were able to express views on this issue. Additionally, the
Board issued about 35 updates to handlers regarding its voluntary
action plan and progress towards its recommended mandatory program.
Finally, interested persons are invited to submit information on the
regulatory and informational impacts of this action on small
businesses.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html.
Any questions about the compliance

guide should be sent to Jay Guerber at the previously mentioned address
in the FOR FURTHER INFORMATION CONTACT section.
A 45-day comment period is provided for interested persons to
comment on this proposal.The comment period is deemed appropriate
because the Board recommended that the mandatory program be in effect
for the 2007-08 crop year, which begins August 1, 2007. For that year,
handlers would have to submit their treatment plans to the Board by May
1, 2006. All written comments received will be considered before a
final determination is made on this matter.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
Chapter 35), the AMS announces its intention to request approval of a
new information collection under the marketing order for California
almonds.
Title: Almonds Grown in California, Marketing Order No. 981.
OMB No.: 0581-NEW.
Expiration Date of Approval: 3 years from OMB date of approval.
Type of Request: New collection.
Abstract: The information collection requirements in this request
are essential to carry out the intent of the Act, to provide the
respondents the type of service they request, and to administer the
California almond marketing order program, which has been operating
since 1950.
On August 22, 2006, the Board unanimously recommended adding a new
section to the order's administrative rules and regulations to
implement a mandatory program to help reduce the potential for
Salmonella in almonds. This document concerns the additional reporting
and recordkeeping requirements regarding this mandatory program, in
addition to the accompanying regulation previously discussed. Almond
handlers would be required to submit annual treatment plans to the
Board and inspection agency regarding how they plan to treat their
almonds to reduce the potential for Salmonella. Entities interested in
being almond process authorities that would validate technologies would
have to submit an application to the Board on ABC Form No. 51,
``Application for Process Authority for Almonds.'' Manufacturers in the
U.S., Canada, and Mexico interested in being approved to accept
untreated almonds, provided they agree to treat the almonds themselves
under the Board's DV program, would have to submit an application to
the Board on ABC Form No. 52, ``Application for Direct Verifiable (DV)
Program for FurtherProcessing of Untreated Almonds.'' Entities
interested in being approved DV user auditors would have to submit an
application to the Board on ABC Form No. 53, ``Application for Direct
Verifiable (DV) Program Auditors.'' This information would be needed by
the Board to properly administer the mandatory Salmonella treatment
program for the California almond industry.
The information collected is used only by authorized
representatives of USDA, including AMS, Fruit and Vegetable Programs
regional and headquarters' staff, and authorized employees and agents
of the Board. Authorized Board employees, agents, and the industry are
the primary users of the information and AMS is the secondary user.

Handler Treatment Plan

Estimate of Burden: Public reporting burden for this collection of
information is estimated to be no more than 27.3 hours per response (80
hours per response for the first year of regulation, and 1 hour per
response each year thereafter) .
Respondents: Almond handlers.
Estimated Number of Respondents: 115.
Estimated Number of Responses per Respondent: 1.
Estimated Total Annual Burden on Respondents: 3,143 hours per year
(9,200 hours for the first year of

[[Page 70691]]

regulation, and 115 hours for each year thereafter).

Application for Process Authority for Almonds--ABC Form No. 51

Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 2 hours per response.
Respondents: Persons or organizations that would like to qualify to
be Board-approved process authorities that validate treatments and
technologies.
Estimated Number of Respondents: 25.
Estimated Number of Responses per Respondent: 1.
Estimated Total Annual Burden on Respondents: 50 hours.

Application for Direct Verifiable (DV) Program for FurtherProcessing of
Untreated Almonds--ABC Form No. 52

Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 1 hour per response.
Respondents: Manufacturers who would like to qualify to participate
in the Board's direct verifiable program.
Estimated Number of Respondents: 53.
Estimated Number of Responses per Respondent: 1.
Estimated Total Annual Burden on Respondents: 53 hours.

Application for Direct Verifiable (DV) Program Auditors--ABC Form No.
53

Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 1 hour per response.
Respondents: Entities that would like to qualify as auditors under
the DV program.
Estimated Number of Respondents: 50.
Estimated Number of Responses per Respondent: 1.
Estimated Total Annual Burden on Respondents: 50 hours.
Comments: Comments are invited on: (1) Whether the proposed
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information will
have practical utility; (2) the accuracy of the agency's estimate of
the burden of the proposed collection of information, including the
validity of the methodology and assumptions used; (3) ways to enhance
the quality, utility, and clarity of the information to be collected;
and (4) ways to minimize the burden of the collection of information on
those who are to respond, including the use of appropriate automated,
electronic, mechanical, or other technological collection techniques or
other forms of information technology.
Comments should reference OMB No. 0581-NEW and the California
almond marketing order, and be sent to the USDA in care of the Docket
Clerk at the address above. All comments received will be available for
public inspection during regular business hours at the same address.
All responses to this notice will be summarized and included in the
request for OMB approval. All comments will also become a matter of
public record.
The AMS is committed to complying with the E-Government Act, to
promote the use of the Internet and other information technologies to
provide increased opportunities for citizen access to Government
information and services, and for other purposes.
It is estimated that handlers and manufacturers may spend between
20-100 hours annually maintaining records pertaining to this rule.
Using a figure of $10 per hour (a sum deemed reasonable, should
handlers and manufacturers be compensated for this time), it is
estimated that the recordkeeping burden would cost handlers and
manufacturers between $200-$1,000 per year. Additionally, handler and
manufacturers would have to maintain related records and documentation
for two full years following the end of the crop year.
A 60-day comment period is provided to allow interested persons to
comment on this proposed information collection.

List of Subjects in 7 CFR Part 981

Almonds, Marketing agreements, Nuts, Reporting and recordkeeping
requirements.

For the reasons set forth in the preamble, 7 CFR part 981 is
proposed to be amended as follows:

PART 981--ALMONDS GROWN IN CALIFORNIA

1. The authority citation for 7 CFR part 981 continues to read as
follows:

Authority: 7 U.S.C. 601-674.

2. Section 981.442 is amended by adding paragraph (b) to read as
follows:

Sec. 981. 442 Quality control.

* * * * *
(b) Outgoing. Pursuant to Sec. 981.42(b), beginning with the 2007-
08 crop year, which begins on August 1, 2007, and except as provided in
Sec. 981.13 and in paragraph (6) of this section, handlers shall
subject their almonds to a treatment process or processes prior to
shipment to reduce potential Salmonella bacteria contamination in
accordance with the provisions of this section.
(1) Treatment process. Acceptable treatment processes shall utilize
technologies that have been determined to achieve in total a minimum 4-
log reduction of Salmonella bacteria in almonds, pursuant to a letter
of determination issued by the Food and Drug Administration(FDA), or
acceptance by a scientific review panel as identified by the Board
(Technical Expert Review Panel or ``TERP''). Such panel shall be
approved at least annually by the Board prior to the beginning of each
crop year, or as needed during the crop year.
(2) On-site versus off-site treatment. Handlers shall subject
almonds to a treatment process or processes prior to shipment either at
their handling facility (on-site), or at an off-site treatment facility
located within the production area. Transportation of almonds by a
handler to an off-site treatment facility shall not be deemed a
shipment.
(3) Validation by process authorities. Handlers shall only use, or
transport their almonds to off-site treatment facilities that use
treatment processes that have been validated by a Board-approved
process authority. Validation means that the treatment technology and
equipment have been demonstrated to achieve in total a minimum 4-log
reduction of Salmonella bacteria in almonds.
A process authority is an entity that has expert knowledge of
appropriate processes for the treatment of almonds as defined in
paragraph (b)(1) of this section, and meets other criteria as specified
by the Board. Treatment technology and equipment that have been
modified to the point where operating parameters such as time,
temperature, or volume, change shall be revalidated. On an annual
basis, process authorities must submit an application to the Board on
ABC Form No. 51, ``Application for Process Authority for Almonds,'' and
be approved by the Board's TERP. Should the applicant disagree with the
TERP's decision, it may appeal the decision in writing to the Board,
and ultimately to USDA.
(4) Compliance and verification. In accordance with the
requirements of this paragraph, handlers shall utilize either an on-
site verification program (traditional), or an audit-based verification
program to ensure that their almonds have been subjected to an
acceptable treatment process to reduce Salmonella bacteria prior to
shipment. Each handler may decide which verification program would be
the most cost-effective for his or her operation.

[[Page 70692]]

(i) By May 31, each handler shall submit to the Board a Treatment
Plan for the upcoming crop year: Provided, That, for the 2007-08 crop
year, which begins on August 1, 2007, each handler shall submit to the
Board its Treatment Plan by May 1, 2007. A Treatment Plan shall
describe how a handler plans to treat his or her almonds, and must
address specific parameters as outlined by the Board for the handler to
ship almonds. Such plan shall be reviewed by the Board, in conjunction
with the inspection agency, to ensure it is complete and can be
verified, and be approved by the Board. Almonds sent by a handler for
treatment to an off-site facility affiliated with another handler shall
be subject to the approved Treatment Plan utilized at that facility.
Handlers shall follow their own approved Treatment Plans for almonds
sent to an off-site facility that is not affiliated with another
handler.
(ii) Handlers utilizing an on-site verification program shall cause
the inspection agency to verify that their Treatment Plans have been
followed, and that their almonds have been subjected to an acceptable
treatment process that has been validated by a Board-approved process
authority. Such handlers shall submit, or cause to be submitted, a
verification report to the Board. The inspection agency must physically
observe the treatment process to issue such report.
(iii) Handlers utilizing an audit-based verification program shall
be subject to periodic audits conducted by the inspection agency. The
inspection agency shall provide copies of the audit report to the
Board. Handlers who do not comply with an audit-based verification
program shall be required to revert to an on-site verification program.
(iv) Interhandler transfers of almonds may or may not be treated
prior to transfer. Handlers receiving untreated almonds from another
handler shall be responsible for treating the product. Handlers
receiving treated almonds from another handler must have procedures
outlined in theirTreatment Plan addressing how the integrity of the
treated almonds will be maintained. In all instances involving
interhandler transfers, the receiving handler shall be responsible for
ensuring that the almonds are treated prior to shipment and maintaining
documentation to that effect.
(5) Records. Handlers shall maintain records and documentation that
will be subject to audit by the Board for the purpose of verifying
compliance with this section. Records must be maintained for two full
years following the end of the crop year, and must identify lots from
the point of treatment forward to the point of shipment by the handler.
Lot identification shall also provide the ability to differentiate
treated from untreated product.
(6) Exemptions. Handlers may ship untreated almonds under the
following conditions. For purposes of this section, container means a
box, bin, bag, carton, or any other type of receptacle used in the
packaging of bulk almonds.
(i) Handlers may ship untreated almonds for further processing
directly to manufacturers located within the U.S., Canada or Mexico.
This program shall be termed the Direct Verifiable (DV) program.
Handlers may only ship untreated almonds to manufacturers who have
submitted ABC Form No. 52, ``Application for Direct Verifiable (DV)
Program for Further Processing of Untreated Almonds,'' and have been
approved by the Board' TERP. Such manufacturers must apply to the Board
and be approved annually by the TERP. Should the applicant disagree
with the TERP's decision, it may appeal the decision in writing to the
Board, and ultimately to USDA. The Board shall issue a DV User code to
an approved manufacturer. Handlers must reference such code in all
documentation accompanying the lot and identify each container of such
almonds with the term ``unpasteurized.'' Such lettering shall be on one
outside principal display panel, at least \1/2\ inch in height, clear
and legible. If a third party is involved in the transaction, the
handler must provide sufficient documentation to the Board to track the
shipment from the handler's facility to the approved DV user. Approved
DV Users shall:
(A) Subject such almonds to a treatment process or processes using
technologies that achieve in total a minimum 4-log reduction of
Salmonella bacteria as determined by the FDA, accepted by the Board's
scientific review panel, or established by a Board-approved process
authority;
(B) Identify the manufacturing locations where treatment will
occur;
(C) Have their treatment technology and equipment validated by a
Board-approved process authority. Treatment technology and equipment
that have been modified to the point where operating parameters such as
time, temperature, or volume, change shall be revalidated;
(D) Have their technology and procedures verified by a Board-
approved DV auditor to ensure they are being applied appropriately. On
an annual basis, DV auditors must submit an application to the Board on
ABC Form No. 53, ``Application for Direct Verifiable (DV) Program
Auditors,'' and be approved by the Board's TERP. Should the applicant
disagree with the TERP's decision, it may appeal the decision in
writing to the Board, and ultimately to USDA;
(E) Maintain all records regarding validation and verification of
treatment methods, processing, and product traceability. Such records
shall be retained for two years and shall be made available for review
by the Board; and,
(F) Ship any almonds which will not be treated to a handler, to
another approved DV User, to locations outside the U.S., Canada, and
Mexico (containers must remain identified with the term
``unpasteurized''), as specified in Sec. 981. 442(b)(6)(i), or dispose
of such almonds in non-edible channels.
(ii) Handlers may ship untreated almonds directly or through a
third party to locations outside the U.S., Canada, and Mexico, provided
that each container of such almonds is identified with the term
``unpasteurized.'' Such lettering shall be on one outside principal
display panel, at least \1/2\ inch in height, clear and legible. If a
third party is involved in the transaction, the handler must provide
sufficient documentation to the Board to track the shipment from the
handler's facility to the importer in the foreign country.
(7) Other restrictions. The provisions of this section do not
supersede any restrictions or prohibitions regarding almonds grown in
California under the FederalFood, Drug and Cosmetic Act, or any other
applicable laws or regulations or the need to comply with applicable
food and sanitary regulations of city, county, State or Federal
agencies.

Dated: December 1, 2006.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 06-9543 Filed 12-1-06; 12:43 pm]

BILLING CODE 3410-02-M